Warner Bros. Discovery (WBD) announced on Tuesday its intention to broaden its strategic review and considers a potential sale of its business, resulting in a 10% surge in its share prices during morning trading. The move comes after the company had already disclosed plans to split into two distinct businesses: one focusing on streaming and studios and the other on global networks.
As part of its ongoing strategic assessment, WBD CEO David Zaslav noted that the company has received “unsolicited interest” from multiple parties and is now evaluating all available options, while still proceeding with its planned separation. “We continue to make important strides to position our business to succeed in today’s evolving media landscape,” said Zaslav, emphasizing the importance of returning their studios to industry leadership and expanding HBO Max globally.
Reports indicate that companies like Netflix and Comcast are among the interested parties exploring the potential acquisition of WBD. The announcement follows the rejection of several offers from Paramount and another unnamed company that reportedly made a bid higher than what Paramount proposed.
While Netflix has historically been uninterested in acquiring legacy media assets, it appears to be vigilant about ensuring that WBD does not fall into the hands of another buyer at a low valuation. On the other hand, while Comcast does not feel an urgent need to pursue a deal, the company is contemplating its options regarding WBD.
For prospective buyers focusing solely on WBD’s studio and streaming resources, acquiring them post-separation may present more attractive tax advantages.
Since the significant merger of WarnerMedia and Discovery Inc. in 2022, WBD has grappled with substantial financial challenges, including over $40 billion in debt. The company has actively engaged in aggressive cost-cutting measures, restructured its content offerings, and centered its efforts around profitable franchises, exemplified by successful series like “Harry Potter” and various “Game of Thrones” spin-offs.
Despite recent progress in reducing its debt, investor skepticism continues, largely due to the company’s cable network portfolio amid a general shift toward streaming platforms. The evolving landscape within the media sector highlights the imperative for WBD to make strategic decisions that could unlock the full value of its assets and better position itself for future growth.